August export rebound points to sustained AI demand through 2027: UOB

The bank says June-July weakness in chips and output was likely temporary.

Singapore’s August export rebound suggests artificial intelligence (AI) demand remains strong after a temporary slowdown in June and July, with major tech firms expected to increase capital spending into 2027, UOB said.

The bank said the rebound reaffirmed its view that weakness in semiconductor exports and industrial production in the past two months was likely temporary.

Electronics exports rose 131.8% year-on-year (YoY) in August. Integrated circuit exports climbed 90.9%, whilst disk media products jumped 290.2% and personal computers surged 237.9%, according to data released by Enterprise Singapore.

Non-oil domestic exports (NODX) jumped 46.2% during the month, accelerating from a 24.1% increase in July. UOB said this was above the 35.1% Bloomberg consensus and its 35.2% estimate.

EnterpriseSg said the increase was partly supported by a low base, as NODX in August 2025 was the lowest monthly level recorded that year at $13.3b.

UOB said the gains likely reflected stronger demand as businesses increased their adoption of AI solutions.

The bank also cited projections from the Monetary Authority of Singapore showing that capital spending by the five largest US hyperscalers in 2026 is expected to be nearly double 2025 levels and rise further in 2027.

Investment in advanced manufacturing is also continuing, such as Applied Materials’ new $600m manufacturing and research campus in Tampines and Applied Angstrom Technology’s AI hardware research and development centre in Woodlands.

A separate Colliers report said manufacturers, technology firms, and research-intensive companies are increasingly seeking facilities suited to specialised production, research and technical requirements.

It expects global demand for AI-related semiconductors and exports to continue supporting manufacturing activity in the second half of 2026.

Electronics shipments to the US surged 342.4% YoY, whilst South Korea was up 151.3%, and Taiwan rose 125.3%.

Growth also broadened to India, Indonesia, and the EU, where electronics exports increased 227.5%, 281.1% and 144.4%, respectively.

However, UOB flagged risks from calls to slow frontier AI development and higher global yields, which could weigh on investment and consumption.

“However, stronger cybersecurity requirements and additional controls on AI development and deployment could, conversely, support chip demand, given the greater computing complexity and data requirements involved,” it said.

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